You are engaged to examine the financial statements of Spillane Company for the year ended December 31.

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You are engaged to examine the financial statements of Spillane Company for the year ended December 31. Assume that on November 1, Spillane borrowed $ 500,000 from Second National Bank to finance plant expansion. The long term note agreement provided for the annual payment of principal and interest over five years. The existing plant was pledged as security for the loan. Due to the unexpected difficulties in acquiring the building site, the plant expansion did not begin on time. To use the borrowed funds, management decided to invest in stocks and bonds and on November 16, invested the $ 500,000 in publicly traded securities. Required: Develop specific assertions (audit objectives) related to securities (assets) based on management’s five (PCAOB) general assertions.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...

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Auditing and Assurance Services

ISBN: 978-0077862343

6th edition

Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws

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Question Posted: Oct 27, 2014 05:15 AM

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You are engaged to examine the financial statements of Spillane Company for the year ended December 31.

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By definition management financial statement assertions give rise to questions that can be answered ...View the full answer

Auditing and Assurance Services

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